What is Thorchain?

THORChain is a decentralized exchange (DEX) that stands out in the blockchain ecosystem for its ability to facilitate native cross-chain swaps. This means users can exchange assets across different blockchains without relying on wrapped tokens, a common workaround in other platforms.

Background

The emergence of THORChain in 2018 marked a significant development in the decentralized finance (DeFi) space. Unique to its establishment is the absence of a central figure or entity like a principal founder, company, or CEO. Despite this, notable individuals in the crypto community, such as Erik Voorhees, are recognized for their substantial involvement with the project.

How Does It Work

THORChain’s operational mechanism is distinguished by several key components:

Node Operations: The platform is maintained by node operators who run full nodes on each supported blockchain. This decentralized network of nodes is essential for validating cross-chain transfers. Multi-Party Computation Protocol: THORChain utilizes a multi-party computation (MPC) protocol. This sophisticated system plays a critical role in managing liquidity pools across various chains, ensuring that assets can be swapped efficiently and securely. Liquidity Provision: The platform offers two types of liquidity provisions: Single-Sided (Savers): This option allows users to provide liquidity with just one type of asset. Double-Sided (Regular LPs): Traditional liquidity providers (LPs) can supply liquidity to pools with a pair of assets, often balancing their contributions between two different tokens. Decentralized Structure: THORChain’s architecture is heavily decentralized, aligning with the ethos of blockchain technology. This decentralization minimizes single points of failure and promotes a trustless environment. $RUNE – The Utility Token: THORChain’s native token, $RUNE, plays a pivotal role in the ecosystem. It is used within the network for various purposes, including liquidity provision, governance, and as a medium for transaction fees Link.